By Idowu Oyebanjo
The Nigerian
Electricity Regulatory Commission (NERC) has finally succumbed to pressure from
investors in the Nigerian Electricity Supply Industry (NESI) to increase the
tariff regime in the absence of steady power supply and at a time of economic
downturn. Consumers, organised labour and affected stakeholders have expressed
dissatisfaction. As painful as this may appear, it is suffice to examine the
Strengths, Weaknesses, Opportunities and Threats inherent in the increased
tariff structure planned for the 1st of February 2016.
 |
| *President Buhari |
Government's
Responsiveness And Support
In every regulated
electricity business, the price of electricity as a commodity needs to be
cost-reflective. This among other requirements means that price must cover the
cost of efficient delivery of electricity through the value chain. Before now,
the price or electricity tariff in Nigeria
is one of the lowest in the world and one of the lowest in West
Africa . Electricity as a commodity is produced worldwide following
roughly the same process so cost should within reasonable limits be reflective
and comparable. The usual dilemma in a regulated business is the requirement
for government, by means of the regulator, to seek to be fair to all
stakeholders especially consumers, while maintaining a fair profit margin for
investors. This is generally a conflicting role. However, the government showed
leadership in trying to accede to the plight of the investors by setting new
guidelines that will enable increased availability of supply albeit with
increase in tariffs to large consumers.
Most Nigerians are exempted from the increased tariffs
The increased tariff
regime exempts consumers in the R1 and R2 categories who make up the largest
number of residential consumers (albeit for six months only) whose consumption
of electricity is strictly for non-commercial, but regular day-to-day home use.
Most homes, and therefore the bulk of workers and citizens, are therefore
unaffected for now. However, it must be stated that consumers who engage in
commercial activities either in their residence or in a separate facility along
with industrial consumers who consume a significant amount of electricity (high
end users) have been directly targeted by the increased tariffs.
